alleryStart learning →A natural monopoly experiences which kind of returns to scale?
ANegative returns
BDecreasing returns
CIncreasing returns
DConstant returns
Answer & Solution
Correct answer: C. Increasing returns
High fixed costs and falling average cost make one large firm the cheapest supplier.
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Related questions
Critics say the perfect competition model wrongly shows all agents as:The equilibrium price of a perfectly competitive market is fixed where:Which markets come closest to perfect competition in practice?Which economic theorem says competitive equilibria are Pareto-efficient?In the short run, perfectly competitive firms are:A firm sells 200 units at Rs 50 each, with average cost of Rs 42 per unit. Its economic prNormal profit is treated by economists as a component of:What attracts new firms into a perfectly competitive industry?